Bum Phillips coached the Houston Oilers in the 1970s. He once complimented Don Shula by saying, “he can take his and beat yours, and he could take yours and beat his”. That was Bum’s way of saying that some leaders find a way to win no matter what resources he or she has.
Back in the 1980s, Walmart and K-Mart served similar customers with similar products. They operated in the same industry and in similar geographies. One compounded earnings per share 38% annually over the ten years of the 1980s, the other at just 8%. One was destined to become the dominant retailer in the U.S. The other was destined for bankruptcy.
The principal difference between these two companies in the 1980s was leadership. Walmart had Sam Walton. K-Mart didn’t.
Like Bum’s description of Don Shula, we believe Walton was the kind of CEO that could win with his resources and could also win with your resources. If you dropped Sam Walton into K-Mart in the late 1970s, the track records of the two companies would have been flipped. He was that good. Identifying Sam Walton for what he was and doing it early in his career would have been life-changing for an investor.
Some leaders find opportunities. Others are the opportunity. The investment opportunity wasn’t Walmart. It was Sam Walton.
For investors with investment horizons measured in days or weeks, the people running the companies they invest in make little difference. For investors with investment horizons measured in years or even decades, getting the people right makes all the difference.
Steve Jobs. Warren Buffett. Henry Singleton. What would it be worth to somehow go back in time and align yourself with one of these 24-karat capital allocators early in their careers? Billions.
The key, though, is finding them early in their careers. Spotting them in retrospect once their records are there for all to see is not difficult, nor is it particularly fruitful. The real value for investors is catching them early in their careers and watching them work their magic.
